One dreary day in December, Uber’s CEO, Dara Khosrowshahi, stood outside the aging municipal offices of Kaga, a hot springs town in western Japan, and hailed the car.
Ever since Uber entered Japan in 2014, the country, one of the world’s largest taxi markets, has remained a stranger. Japanese officials have clamped down on the taxi industry with rules that prevent the Uber app from hailing only licensed taxis. Recently, however, demographic pressures have begun to force the government to change.
Japan’s countryside is deteriorating as the population shrinks, leaving many of the public drivers dry and many of the elderly residents left without transportation. Kaga is among the few states where legislatures have approved the peer-to-peer ride-sharing service that has defined Uber’s rise around the world.
That’s why Mr. Khosrowshahi recently found himself in an Uber – driven by the slightly nervous owner of a soba restaurant – in this remote corner of Japan.
“I’m here because one of our most important plans in growing our car business in Japan is growing outside the big cities,” said Mr. Khosrowshahi, watching as Kaga’s aging rivers open up empty winter cabbage patches and rice fields.
After conquering the market in America, Uber poured billions of dollars into its global expansion. It has gained significant market share in Britain and parts of Latin America, and today generates almost half of its revenue outside the United States and Canada – up from 38 percent in 2022. However, other markets, such as Japan, continue to be challenging.
For more than a decade, Uber has lobbied Tokyo to allow its traditional model, where drivers use their cars to pick up passengers. However, Japanese laws mandated that local taxi operators manage and dispatch such services – a restriction that limited apps like Uber from hailing licensed cabs. That mobile taxi market is dominated by local competitor, Go.
In 2024, Japan began allowing autonomous vehicles in certain areas, such as Kaga, where public transportation and taxis are considered inadequate. Uber started operating in Kaga in the same year. The hope is that this city will be a blueprint for expansion to other rural regions throughout the country, said Mr. Khosrowshahi.
In Japan, “the promise of growth is huge,” he said. “Breaking in here – it’s been a challenge. It’s a very niche market.” Still, he added, “over the last year or so, we’ve seen an increase in the deregulation that has allowed Uber to expand.”
In Kaga, as in many rural areas, the population, about 60,000, is decreasing while the elderly population is increasing. Elderly citizens are giving up their driver’s licenses forcing most of them to rely on taxis and public buses which are plagued by a shortage of drivers.
“When it comes to public transportation, we have a very big problem,” said Toshiaki Yamada, the mayor of Kaga. Uber offered help, he said, adding that local users described the service as “very convenient.”
Mr. Yamada said he’s not sure how popular Uber will be given the low community, but Uber’s recent marketing efforts should help.
“I was born in Kaga, I have worked in Kaga and I will probably die in Kaga,” he said. “I never thought that the CEO of Uber would come here.”
Uber has launched similar rural ride-hailing programs in other underserved areas, including the northern coast of the western Tango Peninsula and the snowy mountains of northern Nagano Prefecture.
In Kaga, early data provides some encouragement for rural Uber. Monthly ridership has increased to more than 300 from 100 at the beginning, Mr. Yamada said.
At the same time, most senior citizens struggle with the basics of smartphone apps, not to mention the unique features of Uber’s interface.
“If you miss one bus, you have to wait for half a day,” said Setsuko Yamada, a resident who was buying food in the city of Kaga. Ms Yamada, who lives in houses in the mountains outside the city center and is not related to the mayor, asked the district bus operator to find more routes. He was told that there are not enough drivers.
Asked if he knew Uber, he replied simply: “No. I’m 85 years old.”
In order to close the gap, local officials turned to communicating with people at the grassroots level, holding conferences at the municipal office to guide residents on the activities of the action plan. Uber posters can be seen all over Kaga, from the City Hall to the railway stations.
During his trip, Mr. Khosrowshahi reflected on Uber’s ten-year run in Japan, describing it as an exercise in persistence.
“Our business in Japan is different from anywhere else in the world,” he said. “By nature I am an impatient person, but Japan forces me to be patient,” he added. “The key here has been compromise.”
